Gwen Moritz

A Cut-Rate Parasite

Gwen Moritz Editor's Note

A Cut-Rate Parasite

“Round up the usual suspects.” — Capt. Louis Renault in “Casablanca”

First, let me say this: I have to assume that “Confidential Human Source 1,” the bribe-paying bond broker who turned state’s witness against former State Treasurer Martha Shoffner, is Steele Stephens. He’s the consensus suspect — the only suspect — because he’s the only person who matches the description given in the FBI’s criminal complaint filed against Shoffner last week: a bond broker who was doing business with the treasurer’s office and whose business increased dramatically beginning about three years ago, when the broker told the FBI that he began making $6,000 payoffs to Shoffner every six months.

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“I don’t mind a parasite. I object to a cut-rate one.” — Rick Blaine

The brazenness displayed on both sides of this dirty transaction is breathtaking. But that’s the only way in which the deal was well-balanced. Commissions paid on bonds Steele Stephens (and his father, Steve Stephens) sold to the state exceeded $2.3 million between July 2009 and October 2011, according to a legislative audit. How much he generated in commissions since then is not known. While the brokerage clearing Stephens’ bond sales undoubtedly received 15 to 20 percent, it’s fair to say that the $36,000 in bribes he paid were a drop in the proverbial bucket.

Martha Shoffner, who resigned on Tuesday, the day after she made her first appearance in court on a federal extortion charge, sold her soul for $1,000 a month. As one industry observer told me, that sort of cut-rate corruption “makes the people in New York or Chicago laugh at us.”

“You’re being cheated.” — Rick Blaine

“It doesn’t matter.” — Ilsa Lund

That’s not the only way in which Shoffner is getting the short end of the stick. She’s already charged with one crime that could easily send her to federal prison if convicted, and the federal sentencing guidelines call for longer sentences when a defendant abuses a “position of trust.” Meanwhile, the guy who profited at least 50 times more has been guaranteed immunity from prosecution by U.S. Attorney Chris Thyer. (I’m not sure why he’s also being protected from public disclosure, although that can’t continue if and when Shoffner’s case goes to trial.)

I will say Securities Commissioner Heath Abshure sounded eager to take action in an interview with the Arkansas Democrat-Gazette last week.

“I’m only a poor corrupt official.” — Capt. Renault

Now, $1,000 a month may be a pittance to a bond broker, but it’s worth keeping in mind that it is more than a minimum-wage worker putting in 40 hours a week takes home each month. And, being tax-free, it also represents a supplement of probably 30 percent in what Shoffner took home from her $54,305 salary as state treasurer. A 30 percent raise — that sounds more tempting, doesn’t it?

“Are you enough of a businessman to appreciate an offer of 100,000 francs?” — Victor Lazlo

“I appreciate it, but I don’t accept it.” — Rick Blaine

I’m not excusing Shoffner. Not at all. She knew the salary when she ran for treasurer, and even $54,000 a year is nothing close to poverty for a single woman who is old enough for Medicare. But it is an embarrassingly low salary for someone who is — or is supposed to be — the state’s chief investment officer.

As a lawyer acquaintance — wait, that’s from another movie — stated so elegantly in an email I’ve decided to sanitize: “All I can say is, you pay a chickenfeed salary, you get chickenfeed employees. … We deserve Martha Shoffner. We are so shortsighted as taxpayers we are willing to screw the elected officials and make them look elsewhere to survive.”

“Come to my office tomorrow morning. We’ll do everything businesslike.” — Capt. Renault

The penny-ante payoffs hidden in a pie box — a plot device straight out of “The Shawshank Redemption” — and the allegation that Shoffner had actually accepted payoffs from CHS1 at the state Capitol grabbed the public’s attention last week. But there’s a point that I’m not sure has been fully appreciated: Despite having been under investigation since early 2012, Shoffner had not retained a criminal attorney until after her arrest on May 18.

This alone makes me wonder if she is competent to stand trial.

Gwen Moritz is editor of Arkansas Business.